Argentine peso and markets plunge after shock vote

[Zorro]

Source: BBC

Argentine stock markets and its currency have both plunged after conservative Argentine President Mauricio Macri suffered a shock defeat in primary elections on Sunday.

The peso fell 15% against the dollar on Monday after earlier plunging around 30% to a record low.

Some of the country's most traded stocks have also lost around half of their value in one day.

Mr Macri, in response, has pledged to "reverse" Sunday's election result. At a news conference on Monday, the president also said that the drop suggested the market lacked confidence in an opposition government.

Read more: https://www.bbc.com/news/business-49323553

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That can't happen here. Right? Right?

[sandensea]

1. It was all very Trumpian. Trading volume was light - but Macri refused to intervene until midday

$200 million or so in dollar sales by Argentina's Central Bank at the opening this morning would've been more than enough to contain the dollar in Buenos Aires' relatively small currency market (mostly local operators).

But the Central Bank waited until 2 p.m. or so - when the dollar had already jumped to 62 pesos (from 46.50) - to react, selling around $100 million or so and pushing it back to 57 pesos.

The reason was two-fold:

One was political revenge.

Macri has a very Trump-like spitefulness and temper, and he felt he needed to send voters a "message."

Indeed, he referred to that several times during his post-election speech this afternoon - in which he refused to congratulate his opponent, Alberto Fernández.

Small wonder Macri and Cheeto are such friends.

And the second was an equally timeless one: sheer greed.

Macri and most of his officials keep most of their assets either abroad, or locally but in dollars. A 23% jump in the exchange rate in one trading day is nice work if you can get it.

Cheeto must be jealous.

[rpannier]

2. K&R

Hope that Macri is driven from office in October

and Daniel Gallas, BBC South America Business Correspondent can go to hell

5th paragraph of his analysis

If he loses, this will be the end of a pro-business agenda to save Argentina's economy that has been implemented since Mr Macri came to power in 2015, which includes IMF loans, austerity measures and the end of capital controls

Save Argentina's economy? Riiiiight

[sandensea]

3. Exactly. Macri adopted Bushonomics - and now seems shocked it led to a Bush-style crisis.

Though I might add that Macri and his coterie have profited quite handsomely from their own debacle:

3000% utility rate hikes? He and his friends are major shareholders.

70% short-term bills? Another gut-punch to the economy but a nice gift to banksters (major backers of theirs).

Three steep devaluations? More economic grief - but dollar-denominated assets benefited (plus, Macri officials and family were caught buying futures ahead of time).

It would be nice if whenever the business press said "market reforms," it didn't mean writing yourself a yooge check at everyone else's expense.

No wonder Cheeto's so impressed with the guy.